Beijing banned banks and payment firms from providing services related to crypto-currency transactions.
It also warned investors against speculative crypto trading on Tuesday.
It follows falls in Bitcoin of more than 10% last week after Tesla said it would no longer accept the currency.
On Wednesday afternoon, the crypto-currency recovered some ground, although it was still down -10.4% at $38,131.
Meanwhile, other digital coins such as Ethereum and Dogecoin lost as much as 22% and 23% respectively.
At the same time, Tesla shares fell more than 3% on Wall Street, possibly because of the electric carmaker's exposure to Bitcoin.
The firm, owned by Elon Musk, still holds around $1.5bn worth of the crypto-currency.